Cobalt Crisis May Cause Legacy Automakers To Struggle To Catch Tesla

ADVANTAGE TESLA: COBALT COULD BE A STICKING POINT FOR LEGACY AUTOMAKERS

Just one word, young man: Cobalt. The silver-gray element (no, it’s not actually blue, sorry) is considered a strategic metal, as it’s a critical ingredient in products from jet engines to drill bits to (who knew?) EV batteries. Tristan Cole, writing in Medium, argues that it’s the most important metal of the 21st century. The price of cobalt has quadrupled in the last two years, and this could be just the beginning – Bloomberg New Energy Finance estimates that global demand could grow 47-fold by 2030.

*This article comes to us courtesy of EVANNEX (which also makes aftermarket Tesla accessories). Authored by Charles Morris. The opinions expressed in these articles are not necessarily our own at InsideEVs.

However, element #27 also has a dark side – 63% of the world’s supply comes from the Democratic Republic of Congo, a war-torn land in which child labor is common. Furthermore, most cobalt is produced as a by-product of mining for other minerals such as copper and nickel, so its supply/demand profile is complex. Mr. Cole’s detailed study of the cobalt market has convinced him that future shortages are all but inevitable.

So what does all this mean for the auto industry? It’s doubtless bad news overall, but there are reasons to believe that the coming cobalt crunch will hit the older generation harder than it will our favorite California carmaker.

With Model 3 production ramping up and the legacy automakers (BMW and VW among others) scrambling to secure battery supplies, there can be little doubt that EVs will be driving cobalt demand for some time to come. As Mr. Cole points out, to pick the winners and losers, it’s important to understand what specific battery chemistries each company is using.

Tesla’s battery cells use an NCA chemistry, which means they use about 80% nickel, 15% cobalt and 5% aluminum. Most other automakers (Toyota is a notable exception) use NMC cells, which have roughly equal proportions of nickel, magnesium and cobalt. So, compared to other EV-makers, Tesla’s batteries already use substantially less cobalt.

Above: A majority of the world’s cobalt supply comes from the Democratic Republic of Congo (Chart: Medium via Bloomberg)

In May, Elon Musk and JB Straubel explained to shareholders and analysts how Tesla got hip to the issues with cobalt early in the game. Together with partner Panasonic, it has reduced its cobalt usage by 60% since it produced the Roadster in 2009. In 2012, Tesla’s average cobalt usage was 11 kg per vehicle. In 2018, it’s 4.5 kg per vehicle.

Tesla has been working to trim its cobalt bill “for literally several years now, and this has been extremely helpful in the overall cost per kilowatt-hour, especially with recent commodity price movements,” said Straubel.

The Sages of Silicon Valley intend to reduce their cobalt craving even further. “We think we can get cobalt to almost nothing,” said Musk. (Tesla has also established a “responsible sourcing” policy that monitors supply chains to ensure that the company isn’t contributing to human rights abuses.)

Tesla’s battery partner Panasonic plans to halve the cobalt content “in two to three years,” according to Yoshio Ito, the chief of Panasonic’s automotive business. “At the research and development level, we’ve already achieved such batteries… but we need to go through various evaluation processes” before mass-producing them, he said.

Each Tesla vehicle currently contains “a few kilograms” of cobalt. By Cole’s calculations (based on a battery size of 60 kWh), it’s about $357 worth, whereas a typical EV from one of the other automakers contains 10 times as much, costing around $2,518.

Above: A discussion about the future of electric vehicles and some of the challenges surrounding cobalt (Youtube: The Economist)

Cole is skeptical about the prospects of slashing cobalt usage: “It’s really hard to build cobalt-free batteries. Cobalt provides longevity and safety to the battery cell. As you decrease the amount of cobalt in a cell, you reduce the life cycle of the cell and increase the propensity for the cell to overheat, which can lead to combustion.”

He also points out that, even as automakers use less in each battery, overall demand is going up, and is bound to accelerate as the EV market grows.

Unfortunately, batteries aren’t subject to Moore’s Law. “Batteries are limited by their chemistry, thus radical improvement in battery technology can only be made by switching to a different chemistry,” writes Cole, who describes himself as “a massive Musk fan, but also a realist.”

“The majority of viable low-cobalt or no-cobalt alternatives are still in the lab….and are not going into mass production anytime soon,” Cole continues. “While Tesla is leading in battery development, cobalt is not going away overnight. Low-cobalt batteries are at least a decade away.”

If Cole and others are right about the coming cobalt crisis, all automakers, including Tesla, are bound to feel the pain. However, Tesla should be less vulnerable to cobalt price hikes and/or shortages.

*Editor’s Note: EVANNEX, which also sells aftermarket gear for Teslas, has kindly allowed us to share some of its content with our readers, free of charge. Our thanks go out to EVANNEX. Check out the site here.

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If oil is any indication: if people really, really need a commodity and put lots of resources to finding new supplies there always turns out to be more of it around than initially thought. Like a lot more. I’m sure peak cobalt will prove as elusive as peak oil.

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5 months ago

Dante

Well to be fair to cobalt, electric vehicles don’t burn it by the tanker load just to keep going and we can be pretty sure Congo isn’t weirdly astronomically significant such that all the cobalt accumulated there. That would be interesting.

I don’t know that we found more oil. It’s more like we found out how to extract oil from its precursor in the shale. Trying really hard at something doesn’t make natural resources appear or we’d be running our cars on whale oil. I mean I guess as long as we are stuck here on Earth looking.

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5 months ago

John Doe

They find new oil fields, and they learn to extract more from older fields.

It all depends on the oil price. How much effort is economical.

Drilling has become more automated, with less workers involver in the drilling process. Keeps cost lower.

In the end, it will slowly be more and more expensive. Gas, plastic, chemical, lubrication, asphalt, aviation fuel . . A lot of uses even after most people drive EVs.

If demand is high enough people will find and extract cobalt from several new locations. If there is a market, and profit could be made – there is a way.

Even recycling EV batteries may be profitable if the scale and profit is large enough.

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5 months ago

Prad Bitt

Don’t forget that plastics (all plastics) account for 6% of what we burn (cough! cough!) and can be replaced by starch based plastics.

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5 months ago

Spider-Dan

Agreed. Congo is not Wakanda; cobalt production will increase elsewhere when the market demands it.

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5 months ago

Anozie

Funny enough, I think Wakanda was modelled after the republic of Congo

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3 months ago

SparkEV BoltEV

GM made cars using no Cobalt battery with 2014 SparkEV. If things get too dicey with Cobalt, GM has experience with zero Cobalt for EV whereas Tesla has no battery that doesn’t use Cobalt. Seems to me GM is in better shape than Tesla with regard to Cobalt.

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5 months ago

Unplugged

Obviously, GM/LG had cost or longevity issues with using no cobalt because cobalt has reappeared on the Bolt.

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5 months ago

SparkEV BoltEV

Cobalt came back for 2015+ SparkEV even before Bolt. But the point I was making is that GM has experience building EV based on no Cobalt battery (eg. lower cell voltage, higher power density, etc and associated technical know-how) whereas Tesla has none.

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5 months ago

antrik

Actually, their original battery supplier (A123 systems) went bankrupt. Few car makers wanted to use these LFP (iron phosphate) cells, with their poor energy density…

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5 months ago

antrik

Actually, Tesla is in a very good shape, if they became desperate and wanted to switch to LFP cells. These are widely available in cylindrical format from various makers — Tesla could start using them with nothing but a BMS software update, if they really had to. But they won’t. The situation would have to get *really* bad for anyone to consider going back to the low energy density LFP cells for automotive use — even China is moving away from they now. This is not about going back to obsolete chemistries. (Why not bring up NiMH? Or maybe lead-acid?) This is about new high-capacity low-cobalt cells. Of course other makers could switch to low-cobalt NCA, too… But they would have a harder time, since their battery architectures are not prepared for these more volatile cells. (There are no large prismatic or pouch cells with this chemistry right now to the best of my knowledge — and I’m not sure they would be considered feasible at all. Even if there were, the pack architecture would probably need changes to integrate additional safety measures.) I’m not convinced the Cobalt problem is as big as it’s currently being made out to be,… Read more »

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5 months ago

mzso

Won’t be an issue for batteries. Advanced cathode materials without cobalt are being developed.

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5 months ago

Shoot

There is a place here in Ontario, Canada called Cobalt. Guess what they mine. It has been hit hard economically over the years so this is good news for them.

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5 months ago

Ocean Railroader

I personally think that there are several million tons of Cobalt that could be located deep under Canada and the United States but the reason why the Congo is popular to dig it out. Is they can have people with shovels digging it out on the surface for pennies on the dollar with a form of modern slavery paying almost nothing for labor.

In the United States and Canada they would most likely use large mega machines and drills and high tech workers to dig the cobalt out of ground which is something they are not going to look at using while they can dig it out with sweat shop labor and hand tools.

The reality is cobolt is 32 dollars a pound and the prospect of the price rising to $50 dollars a pound seems likely then they are going to keep digging it out of the place were they can get it out for almost for free.

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5 months ago

lamata

I heard Tesla Was up there snooping around over 1.5 yrs ago & whatever they Negotiated if anything is Unknown yet..

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5 months ago

Nix

There is still some elasticity in current uses for cobalt. As prices rise existing users of cobalt can reduce their usage

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5 months ago

Nozuka

“Tesla’s battery cells use an NCA chemistry, which means they use about 80% nickel, 15% cobalt and 5% aluminum. Most other automakers (Toyota is a notable exception) use NMC cells, which have roughly equal proportions of nickel, magnesium and cobalt. So, compared to other EV-makers, Tesla’s batteries already use substantially less cobalt.”

This is outdated info. AFAIK cars like the Niro are already using NMC 622, meaning 60% nickel, 20% cobalt and 20% aluminum. And NMC 811 (80% / 10% / 10%) starts coming out in the next 2 years and production is slowly starting. That’s most likely why all the big manufacturers are announcing cars for 2020.

And Tesla is likely below 15% already. (Not sure about this one, but i thought i read that somewhere.)

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5 months ago

Rebel44

According to German teardown of Model 3, Tesla 2170 batteries contain just 2.8 percent

Thanks for the link. It certainly does confirm that Tesla 2170 cells use 2.8%, rather than the 15% stated in this article. That is quite a difference!

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5 months ago

antrik

I think the 2.8% number is the total of the entire cell; while the 15% figure for the older NCA chemistry was the cathode only, which comes out to about 6% total. (While current NMC 6-2-2 would be about 8% total, and the upcoming NMC 8-1-1 about 4%.)

Not entirely sure though, as the wording of the statements was not really clear…

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5 months ago

JoeInTheUK

And musk recently tweeted that the model 3 batteries use 3% and near future iterations would halve that and then have none. So this 15% figure doesn’t fit, and neither does it fit with the estimation they make that Tesla have 10x less cobalt as cars with similar size batteries yet at the same time have 15% compared to 20% cobalt. Those two number are at odds.

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5 months ago

Pushmi-Pullyu

Thanks! I had a suspicion the numbers in the article are outdated, since battery makers worldwide are trying to reduce the amount of cobalt used. Thank you for providing some hard data on that.

It’s not like Tesla is the only one succeeding at that, despite what the article implies.

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5 months ago

antrik

Yeah, all makers are reducing the amount of Cobalt — but Tesla/Panasonic remains significantly below the others 🙂

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5 months ago

SJC

Cuba has LOTS of cobalt, time to help them build their economy.

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5 months ago

Mister G

Cuba really? I wonder if other Caribbean islands have cobalt?

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5 months ago

SJC

Don’t know, only Cuba was listed. You don’t need cobalt for Powerwall.

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5 months ago

God/Bacardi

Solid State doesn’t use cobalt…

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5 months ago

Pushmi-Pullyu

How? No matter what kind of battery, it needs a cathode, an anode, and an electrolyte. Switching from liquid to solid electrolyte shouldn’t eliminate the need for cobalt in the cathode.

Now, that’s not to say that there can’t be some sort of high energy-density battery that uses a completely different chemistry. Li-ion batteries may not be what we’ll use for electrical energy storage in the future. But it’s hard to see why simply switching from a liquid to a polymer electrolyte in a li-ion battery would mean that it no longer needs cobalt.

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5 months ago

antrik

Well, switching to a solid state electrolyte curbs parasitic reactions, which AIUI does open the door for more reactive cathodes having higher nickel contents, with less problems than it causes when using liquid electrolytes… A blanket statement that it doesn’t use cobalt is indeed BS though to the best of my knowledge.

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5 months ago

SJC

Just because an electrolyte is solid does not preclude using cobalt.

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5 months ago

filip bjurling

Well this is wrong:
“Tesla’s battery cells use an NCA chemistry, which means they use about 80% nickel, 15% cobalt and 5% aluminum. Most other automakers (Toyota is a notable exception) use NMC cells, which have roughly equal proportions of nickel, magnesium and cobalt.”

Tesla uses a couple of percent of cobalt and the ncm is often called “622” meaning 20% cobalt.

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5 months ago

Scott

Yah the article is wrong and contradictory on this point. It says Tesla batteries are just 4.5kg of cobalt. But cobalt is 15%. So the the battery would weigh just 30kg. Which is obviously wrong.

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5 months ago

antrik

It’s not 15%. It used to be 15% of the cathode in the older cells according to some sources, which would be about 6% of the total cell weight. The new cells in the Model 3 have about 2.8% or 2.9%. (Presumably of the entire cell.)

That would still make more than 4.5 kg, though… Something around 9 kg by my calculation.

It would be around 4 kg though if the 2.9% was the cathode only; so maybe that’s how they arrived at this number…

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5 months ago

Pushmi-Pullyu

So then, the article not only uses outdated info, it gets the math wrong.

Sadly, this is the sort of poorly researched fluff piece seen all too often at Evannex. 🙁